China absolutely does recognise that though? Why do you think they invest so much in public transport like HSR, sprawling subways and a huge bus network? They simply realise that the green revolution much like the socialist one is a process. You can't just press the green button and do away with cars, you need to first build up the infrastructure to support every part of society not just the urban cores.

Since cars remain a necessity for many as China has a huge swathe of rural areas not yet catered to (to the the extent required) by public transport connections it's best to have the cleanest best version of cars until they are.

It's the same logic behind why they built new coal plants even into last year. Coal is unfortunately still necessary to support the grid for now but the new ones are much more efficient and clean and therefore it's worth investing in their replacement with newer plants until they can be fully phased out.